Elliott Waves - The only way to Wave Introduction Part 1
00:32 - UTILITY
- Elliott Waves are one of the best tools for predicting future prices and targets inside of any market.
- At their core, they use previous price action in conjunction with Fibonacci tools.
- We can also predict the date of a move using Fibonacci Time with Elliott Waves.
- To be a good Elliott Wave trader, you MUST have mastered trading psychology and your emotions. Fibonacci tools should be mastered as well.
- This is because you will only buy on retracements and only sell when the market is the most bullish. This will be challenging emotionally.
- It is also important to be able to switch from a bullish to a bearish bias quickly when required.
*Key: Elliott Waves and Fibonacci are two tools that go hand in hand and work together.*
02:19 - IMPLEMENTATION
- Elliott Waves consist of Impulse Waves and Corrective Waves.
- Impulse Waves make the trend, and the Corrective Waves are the smaller pullbacks and rallies within the larger trend.
- An Impulse Wave has a 5-Wave structure.
- A Corrective Wave has a 3-Wave structure.
02:44 - EXAMPLE 1
- We are shown a basic 5-wave Impulse pattern.
- Waves 1, 3 and 5 are Impulsive.
- Waves 2 and 4 are Corrective.
- Within each Impulse Wave (1, 3 and 5), we have smaller subdivided waves.
- These 5 sub-waves make up the Impulse Wave.
- Within each Corrective Wave (2 and 4), we have 3 smaller waves. Note: these can be 5 waves if there is an ABCDE triangle pattern.
- All of these waves combined gives us the overall 5-wave impulse.
- Remember the fractal nature of Elliott Waves: each wave will have a subset of waves inside all the way down to the smallest time frame.
- After a completed 5-wave impulse, we expect a correction of 3 large corrective waves, known as A, B and C.
- After this correction finishes, we can expect another 5-wave impulse to follow.
05:14 - TIPS & TRICKS
- Elliott Waves can be used on any time frame, from the 1-month to the 1-minute.
- It is preferable to use Elliott Waves on Higher Time Frames such as the 4h+.
- Sometimes you will not know for certain if a structure is Impulsive or Corrective until more time has passed and more data can be collected.
- Every trade idea should encompass a Bullish and Bearish count, only trade one preferred count at a time.
- All price action in Elliott Waves is a fractal. Eg: if you see a wave 1 upwards on a Daily Time Frame, you should be able to go down to a 4h chart and see 5 smaller pivot points.